GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

United States General Accounting Office

Washington, DC 20548

November 17, 2000

The Honorable John McCain

Chairman

The Honorable Ernest F. Hollings

Ranking Minority Member

Committee on Commerce, Science,

and Transportation

United States Senate

The Honorable Bud Shuster

Chairman

The Honorable James L. Oberstar

Ranking Democratic Member

Committee on Transportation

and Infrastructure

House of Representatives

Subject: Metropolitan Washington Airports Authority: Information on Contracting at

Washington Dulles International Airport and Ronald Reagan Washington

National Airport Between 1992 and 1999

The Metropolitan Washington Airports Act of 1986 provided for the lease of

Washington Dulles International Airport (Dulles) and Ronald Reagan Washington

National Airport (National) and the transfer of operating responsibility from the

federal government to the Metropolitan Washington Airports Authority (MWAA).

MWAA has operated the airports since June 7, 1987, under a 50-year lease with the

U.S. Department of Transportation. Under the statutory terms of its lease, MWAA is

charged with the protection, promotion, operation, and maintenance of Dulles and

National airports in Virginia. To carry out this mandate, MWAA enters into a wide

range of contractual relationships for the acquisition of goods, supplies, and

construction and other services. Acquisitions range from office supplies to heavy

mobile equipment, from fuel oil and gasoline to replacement parts for airconditioning systems, and from minor repairs to major construction, as well as

various professional consulting services. MWAA also contracts for a variety of

revenue-generating concessions that provide rental cars, food and beverages,

newspapers and gifts, public parking, and other goods and services needed by the

airports’ users. Because MWAA does not maintain a centralized database on its
2 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

award of concession contracts, the information in this letter is limited to MWAA’s

award of contracts for supplies and services, including construction.

The 1986 act, as amended, requires us to periodically review MWAA’s contracting

practices.1

In consultation with your offices, we agreed to determine (1) the extent of

MWAA’s contracting activities between 1992 and 1999; (2) whether MWAA maximizes

the use of full and open competition for contracts estimated to exceed $200,000, as

required by the act and MWAA’s lease with the federal government; and (3) whether

MWAA follows sound government contracting principles. This letter provides

information on the extent of MWAA’s contracting for supplies and services between

1992 and 1999, including information on its contract awards in excess of $200,000.

We are continuing our review on the other two objectives and will report separately

on these issues when our work is completed.

In summary, MWAA awarded 2,843 contracts for supplies and services, including

construction, at an initial award amount (in constant 1999 dollars) of about $1.43

billion from January 1, 1992, through December 31, 1999. On average, MWAA

awarded about 355 contracts annually over the 8-year period. The average value of

the contracts when awarded was approximately $504,000. MWAA’s contracting

peaked in 1994, when it awarded about $410 million in contracts. (See fig. 1.)

1

Our first report responding to this requirement, Contract Award Practices: Metropolitan Washington

Airports Authority Generally Observes Competitive Principles (GAO/RCED-93-63), was issued on Feb.

8, 1993.
3 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

Figure 1: Number and Value of Contract Awards, Calendar Years 1992-99

Note: Amounts are in constant 1999 dollars.

Source: GAO’s compilation of data from MWAA. MWAA’s data are as of Dec. 31, 1999.

About 74 percent of the contract awards were for non-construction-related supplies

and services. However, these contracts accounted for only about 17 percent of the

total amount of MWAA’s awards during the period. As shown in figure 2, the bulk of

MWAA’s contract award dollars were for construction-related activities, including the

design of airport facilities.

Dollars in millions Number of contracts

Award amount

Number of contracts
4 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

Figure 2: Number and Value of Contract Awards, by Contract Type, 1992-99

Notes:

1. Amounts are in constant 1999 dollars.

2. Non-construction-related supplies and services are grouped together because, prior to 1997, MWAA’s database did not

differentiate between contracts for supplies and services.

3. Construction includes the design and construction of new projects and the design and rehabilitation of airport facilities.

MWAA’s database includes five categories for construction contracts. For our analyses, we combined these categories

into one category—construction.

Source: GAO’s compilation of data from MWAA. MWAA’s data are as of Dec. 31, 1999.

Contract modifications have increased the cost of MWAA’s initial contract awards.

Specifically, the amount authorized through December 31, 1999, for the 2,843

contracts MWAA awarded between 1992 and 1999 grew by about 38 percent—from

about $1.43 billion at award to about $1.98 billion. This growth resulted from, among

other things, MWAA’s modification of contracts to extend the period of performance

or to otherwise purchase additional supplies or services.

The statute establishing the terms of MWAA’s lease with the federal government

requires MWAA to use full and open competition—to the maximum extent

practicable—in contracting for supplies and services, including concession services,

whose value is “estimated to be more than $200,000.” Our analysis of MWAA’s

database indicates that 461 of the 2,843 contracts awarded between 1992 and 1999 for

supplies and services, including construction, were estimated to exceed $200,000.

The 461 contracts had an award value of about $1.31 billion and accounted for about

91 percent of the amount of MWAA’s contract awards during the period. (See fig. 3.)

Construction

Other

Number of contracts Value of contract awards (in billions)
5 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

Figure 3: Number and Value (in Billions) of Contract Awards Estimated to Exceed $200,000, Calendar

Years 1992-99

Note: Amounts are in constant 1999 dollars.

Source: GAO’s compilation of data from MWAA. MWAA’s data are as of Dec. 31, 1999.

Construction contracts accounted for 62 percent (286) of the 461 contracts. The

remaining 175 contracts were for other goods and services. In total, the amount

authorized for the 461 contracts increased by about 35 percent—from about $1.31

billion at award to about $1.76 billion as of December 31, 1999.2The average increase

was approximately $980,000 for construction contracts and about $1.01 million for

other contracts.

MWAA’s database does not indicate to what extent MWAA used full and open

competition for the entire period between 1992 and 1999, in part because MWAA did

not begin recording this information in its database until mid-1997. According to

MWAA’s database for 1998 and 1999, however, 95 of the 124 contracts that MWAA

estimated would cost more than $200,000 were awarded using full and open

competition. The remaining 29 contracts were identified as having been awarded

either using limited competition or on a sole-source basis. Our discussions with

MWAA officials and our review of the contracts’ documentation indicated that 4 of

the 29 contracts were miscoded. After being corrected for this miscoding, the

database indicates that MWAA awarded 99 contracts using full and open competition

in 1998 and 1999. According to MWAA’s database, the remaining 25 contracts were

awarded using less than full and open competition. The 25 contracts constituted

2

All amounts are in constant 1999 dollars.

Award value of contracts estimated to

cost more than $200,000

Award value of contracts estimated to cost

$200,000 or less

Number of contracts estimated to

cost more than $200,000

Number of contracts estimated to cost

$200,000 or less
6 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

about 20 percent of the 124 contracts awarded during the 2-year period and about 15

percent of the contracts’ award value. Fourteen of the 25 were awarded on a solesource basis, and 11 were awarded using limited competition. (See fig. 4.)

Figure 4: Number and Value (in Millions) of Contracts Awarded in 1998 and 1999 That MWAA Estimated

Would Cost More Than $200,000

Note: Amounts are in constant 1999 dollars.

Source: GAO’s compilation of data from MWAA. MWAA’s data are as of Dec. 31, 1999.

Scope and Methodology

To determine the extent of MWAA’s contracting activities, we obtained, reviewed,

and analyzed MWAA’s database on supply and service contracts, including

construction contracts, and identified contracts MWAA awarded between January 1,

1992, and December 31, 1999. We performed limited work to evaluate the integrity

and reliability of MWAA’s database. This included the identification and elimination

of duplicate contract entries and the reconciliation of contracts identified in MWAA’s

database as having been awarded using limited competition or on a sole-source basis

(less than full and open competition). We did not, however, review contracts

identified as having been awarded using full and open competition to determine

whether the contracts were properly coded in MWAA’s database. We analyzed the

database by year, number, amount, contract type, and solicitation method—full and

open competition, limited competition, or sole-source award.3

We discussed

database limitations and the results of our analyses with MWAA contracting

3

“Amount” includes the estimated amount, award amount, and current amount as indicated in MWAA’s

database as of Dec. 31, 1999. “Contract type” indicates whether a contract was for supplies, services,

or construction.

Number of contracts awarded using

full and open competition

Number of contracts awarded using

less than full and open competition

Award value of contracts awarded using

full and open competition

Award value of contracts awarded using

less than full and open competition
7 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

personnel. We performed our work from October 1999 through November 2000 in

accordance with generally accepted government auditing standards.

Agency Comments

We provided copies of a draft of this letter to MWAA for its review and comment.

MWAA commented that it fully appreciates its statutory obligation to secure, to the

maximum extent practicable, full and open competition on its contract awards and

that, in its view, it has achieved that objective. MWAA took exception to our

inclusion of 12 of the 14 contracts identified as sole-source awards in this letter.

According to MWAA, six of these contracts were to reimburse individual airlines for

work the airlines had performed and were therefore not subject to the statutory

terms of MWAA’s lease (statutory lease provision). MWAA also maintained that three

other contracts, which it had initially expected to cost more than $200,000, were not

subject to the statutory lease provision because their value, when awarded, was less

than $200,000 each. Finally, MWAA commented that the remaining three contracts

were for follow-on work to contracts that had previously been awarded using full and

open competition. According to MWAA, these contracts were misclassified in its

database as sole-source awards. MWAA’s comments are included in enclosure I.

We do not assess in this letter whether MWAA has complied with its statutory

obligation to secure full and open competition to the maximum extent practicable in

contracting for supplies and services whose value is estimated to exceed $200,000.

Such an assessment cannot be made on the basis of the information in MWAA’s

database. Our purpose was solely to describe the scope of MWAA’s contracting

activity. To determine the number of sole-source awards, we used contracts

identified in MWAA’s database as having been awarded without competition and as

having an initial estimated value in excess of $200,000. This approach is consistent

with the language of MWAA’s statutory lease provision. Since the 12 contracts that

MWAA would exclude were, in fact, awarded without competition, we did not adjust

the number of sole-source contracts identified in this letter. We did, however, revise

the letter to more clearly indicate that the contracts were classified as sole-source

awards in MWAA’s database. Our assessment of MWAA’s compliance with the

statutory lease provision will be the subject of a subsequent report.

-----

We are sending copies of this letter to the Honorable David T. Ralston, Jr., Chairman,

Board of Directors, MWAA, and to others upon request. Please contact me or

Kathleen Turner at (202) 512-2834 if you or your staff have any questions. In addition,

David Bryant, Jr.; Etana Finkler; Arthur James, Jr.; and Larry Turman made key

contributions to this letter.

Phyllis F. Scheinberg

Director, Physical Infrastructure Issues

Enclosure
Enclosure I

8 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

Comments From the Metropolitan Washington Airports Authority
Enclosure I

9 GAO-01-185R Contracting by the Metropolitan Washington Airports Authority

(348197)
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